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“Never attempt to win by force what can be won by deception.”
Niccolò Machiavelli, The Prince

For six and a half years I served as a public official on the California Coastal Commission. Since it’s been a year since I resigned, it’s time to tell a few stories about what I learned as a Coastal Commissioner.

Each and every month I learned something new about human nature, deception and greed.

BackgroundThe California coast is a panorama of open farm fields and hundreds of miles of undeveloped land. Highway 1 (the Pacific Coast Highway) follows the coast for almost the entire length of the state. The kind of road you see in car ads and movies, it looks like it was built to be driven in a sports car with the top down. The almost 400 mile coast drive from Los Angeles to San Francisco is one of the road trips you need to do before you die. With 39 million people in the state, there’s no rational reason there aren’t condos, hotels, houses, shopping centers and freeways, wall-to-wall for most of the length of our state’s coast (instead of just in Southern California).

In 1976 the state legislature passed the Coastal Act, creating the California Coastal Commission, which acts as California’s planning commission for all 1,100 miles of the California coast. The Coastal Act saved California from looking like the coast of New Jersey, giving us the most pristine and undeveloped coast in the country — with recreation and access for all.

To achieve this amazing accomplishment, the coastal zone has the strictest zoning and planning requirements in the country.

As a new commissioner I got a very quick education on what developers would do to bypass those requirements. My first lesson was farming for developers. The second lesson was learning that developers would strap hostages on the front of the tank to get a project approved.

How Do We Fix This?The business model for real estate developers isn’t hard to understand: buy farms and/or ranches then build commercial buildings or houses and sell them off. They make money from the difference between the raw land and net profit on the houses or the commercial buildings. But there’s a lot that has to happen before developers can realize their profits. If they’re building homes, they need to get approvals to rezone and subdivide the property, bring in utilities (water, sewer, electricity, phone, internet), build infrastructure (roads, sidewalks, street lights, etc.), get approvals to build the units, etc. A lot of capital is at play.

At times developers building in the Coastal Zone know that their proposed project violates major provisions of the Coastal Act like building in Environmentally Sensitive Habitat Area (ESHA) or bulldozing Wetlands or attempting to rezone land reserved for farming or open space, blocking coastal views, busting the urban rural boundaries or building a project too large for the site, or lacking public services like insufficient water, or sewers. Some of these projects are such egregious violations of almost every part of city, county and coastal zoning that I wondered, “What on earth are they thinking? This will never be approved.” Part of my education as a commissioner was learning how developers took projects that appeared headed for instant denial and turned them into projects that had a good shot at an approval.

We’re Doing This For Our CommunityI soon learned that developers love new soccer fields, new parks, new schools, homes for the disabled, and they generously offer these and other improvements to the local community as part of a package – approve this project and I’ll throw in this benefit.

When I first encountered this, I thought, “Wow what a great deal. The developers are generously helping the community by offering needed amenities and services that the community can’t afford.“

Boy was I dumb.

In these projects the developers calculate that if they add a component to the project that the local community really needs, wants, and most important – can get passionate about – community support might overwhelm local elected officials. So developers promise to build needed soccer fields to get the soccer parents supporting their project or offer to build a new building for the local Boys and Girls club or pay for a long needed school. Then they actively help the community organize an “independent” advocacy group to support and lobby for this project.

In all these cases, the developer’s goal is to move the scrutiny away from the specifics of their development to get all eyes focused on the benefit. To them it’s simply math – if they can’t get a project approved by itself, try throwing in a school or soccer field if it’s still profitable. They get the local community so focused on these extra benefits that no one objects to everything else about the project that’s damaging – not only to their own community but to the rest of 39 million people in the state who share their coast.

Developers calculate that in the face of overwhelming public support for their project, local elected officials will look at a roomful of supporters, remember that the attendees passionate about this project vote at election time, and approve a project in spite of its obvious violations of local and state zoning. However, while local projects in the Coastal Zone typically start by getting city or county approval, if someone appeals the project claiming it violates the Coastal Act, these projects invariably end up in front of the Coastal Commission. As a coastal commissioner, that’s when I got involved.

Our Coastal Commission staff would do a thorough analysis of the entire project (not just the tacked on benefit) and propose their recommendations to us. Then the theater would happen. Developers would bus in the local supporters to fill the Coastal Commission meeting with enthusiastic locals waving signs and passionately extolling the virtue of the soccer field on the bulldozed wetland or conveniently ignoring the wall-to-wall condos that would block coastal access for the other 39 million Californians or the freeway about to destroy a favored surfing spot. The developers hoped the momentum of community support would overwhelm the twelve Coastal Commissioners, six of whom were also local elected city or county officials.

After a while I realized that the worse the project, the more appealing the benefit a developer would offer.

Hostages Strapped to the TankI thought I had seen it all until one project came to the Commission on appeal that felt like the developers had strapped hostages onto the front of a tank and dared the county and Coastal Commission to deny the project.

The developers wanted to build 8 office buildings totaling 225,000 square feet (twice the size of an average Wal-Mart) plus a parking lot with 640 spaces, all of this in an area without public services. To get the water the project needed, the developers proposed to convert an agricultural well as its domestic water source and dump part of their wastewater into the public sewer system. And there was more. Traffic from this huge project would fill local roads not designed for this density/development, and this traffic would impact the public’s beach access. Given all this, how did they get unanimous approval from the county’s Board of Supervisors?

It was brilliant. They proposed that after building these eight office buildings, they would build a housing facility for 57 developmentally disabled adults. They had convinced the dedicated, deserving and passionate parents of this group that this project was the only hope these families would ever have to secure housing for their children (neglecting to tell them they had located the housing in a tsunami inundation area.)

Naturally these parents were vociferous advocates for the project. They brought their disabled children to the hearings and did exactly what the developers had hoped – moved the attention from a project that violated local and state zoning onto a small and deserving group of individuals. It was heartbreaking. The developers dared us to shoot the hostages strapped to the front of their tank.

We did.

At the hearing there wasn’t as single commissioner with a dry eye. Yet we unanimously denied the project. The commissioners explained to the parents that while the goal of providing housing for developmentally disabled adults was eminently laudable, the developers had exploited the parents’ pain to get the project approved. We pointed out that the Coastal Commission staff had attempted to negotiate with the developer to reduce the size and scale of the project before the hearing. But they had refused (as some suggested because they were certain that since their strategy had worked to get the county to approve the project, would force the Coastal Commission to roll over as well.) We told the developer we applauded their desire to build housing for the developmental disabled and to come back with a project that met local and state Coastal Act requirements.

While I learned a lot about what someone would do for profit, I hated this lesson.

Lessons Learned

Developers offer “shiny objects” to distract attention from the rest of their project

Often, the worse the project, the more appealing the benefit a developer offers

At times developers dared the Commission to shoot the hostages strapped to the front of their tank

20 Responses

Steve, your articles are always full of useful lessons learned. On this occasion you and your colleagues deserve a big thank you simply for the amazing outcome – protecting the coastline. You should be proud.

Great read. As someone who has driven the Ca coast from San Diego up through Oregon, it is clear where the Ca coastal commission has continued to protect the breathtaking beauty of the coast. I hope it will continue to do so as the parts of the coast with dense commercialism feels like such a blight on nature. Thank u for your previous service on the commission

What do you think about Dharma Publishing locating a massive commerical building in The Sea Ranch, and constantly driving huge trucks back and forth from Berkeley to The Sea Ranch? Who allowed that monstrosity? Is there any way to put a stop to it?

Thank you for doing the public a service and volunteering your time.
It is always funny how the good project is “after” the commercial development. Too many times the after never actually happens.
We had a group here trying to build a new “church”. Think Oral Roberts University. Really it was high end Mcmansions around a public lake. The county had to spend almost $15 million for roads, sewer, water and a new fire station.
They claimed religious discrimination when the county said no.

What are some of the ways in which the developers here could have responded to the commissioners in ethical ways? For instance, they could reduce the project size in return for allowing 2 or 3 similar projects in one approval while providing housing for 100 families. Just exploring if there are better ways!

There were plenty of ways for the developer to work with the commission before the hearing. Our staff had been communicating with the developer throughout the process. Staff kept suggesting changes in size, scope and siting. The developer simply stonewalled the staff.

However it seemed clear to all involved that the developer thought they had a shot and getting an approval without any changes. They bet these families future on it.

Coming from someone with such valuable insights into business and economics, this broad-brush demonizing of real estate developers (yes I’m one) is really disappointing. Are there unscrupulous developers? Undoubtedly. Are they all? Certainly not. Should business people be demonized for legally using the means at their disposal to bring their products to market? Or for attempts win public support?

The efforts to win public support which you describe (excluding the disabled housing example) sound like smart business. Historic complaints about developers were that they didn’t care about the community or bear the costs of needed infrastructure. Yet here are examples of developers listening to what the community wants and trying to supply it. Do they get something out of it? Sure, after all this isn’t charity; but you make it sound nefarious. Perhaps the disabled housing ploy was nefarious, but since they didn’t bother to address the concerns of the commission or its staff, they sound like they were simply stupid for trying such a gambit without some other foundation for gaining approval.

The real debate here is about land use policies, private property rights, public infrastructure, and supply and demand. The California coastline is a treasure, but what are the real costs of the land use policies that protect it?

Are the sky-high prices of homes in Silicon Valley a good thing? How much do local land-use policies have to do with that? The larger the gap between supply and demand, the greater the potential profits from finding a way to bridge the gap. And the more extreme the efforts to win approval will be.

Developers don’t manufacture demand for their projects. Like any other entrepreneur, they simply attempt to fulfill demand they perceive exists, often times taking huge personal risks to do so. One needs to look at government policies to see why there is such an imbalance between supply and demand.

This exact thing happened during the campaign by Sanford Edward to build The Strands that destroyed bluffs, ESHA, installed a huge new seawall, etc. During that campaign, they offered to pay for the construction of a “historic” lighthouse, even though a lighthouse never existed at Dana Point Headlands. The concept was considered in the past but never built. They even formed a group, the Dana Point Lighthouse Society. They showed up at the CCC meetings by the dozen’s, complete with shirts, pins and jackets in support of the project so they could get their lighthouse.